NORWALK, CT – October 15, 2014 – Health care merger and acquisition activity increased again in the third quarter of 2014. Deal volume rose 10% versus the previous quarter, to 326 transactions. M&A activity in the quarter was up 19% versus the third quarter a year ago, when 275 deals were announced. Services transactions accounted for 53% of the Q3:14 deal total, and Technology transactions made up 47%.

The Health Care M&A Market – Deal Volume by Sector

Q3:14

Q2:14

Q3:13

Sector

Deals

Deals

Change

Deals

Change

Services

Behavioral Health Care

3

7

-57%

2

50%

Home Health & Hospice

13

15

-13%

12

8%

Hospitals

9

9

0%

23

-61%

Labs, MRI & Dialysis

8

7

14%

8

0%

Long-Term Care

80

61

31%

60

33%

Managed Care

5

8

-38%

6

-17%

Physician Medical Groups

14

15

-7%

15

-7%

Rehabilitation

5

5

0%

4

25%

Other

36

28

29%

37

-3%

Services subtotal

173

155

12%

167

4%

Technology

Biotechnology

27

34

-21%

25

8%

eHealth

33

28

18%

17

94%

Medical Devices

25

31

-19%

23

9%

Pharmaceuticals

68

49

39%

43

58%

Technology subtotal

153

142

8%

108

42%

Grand total

326

297

10%

275

19%

Source: Health Care M&A News, October 2014

Deal value hit a new record for third-quarter spending on health care transactions. The combined total for M&A activity in the third quarter reached $117.2 billion, which was actually 13% lower compared with the blistering pace for spending set in the second quarter ($135 billion). Even so, deal value in Q3:14 was 133% higher than the same period a year ago, when the combined deal value totaled just $50.2 billion.

Health Care M&A – Deal Volume by Sector

Q3:14

Q2:14

Q3:13

Change

Change

Services

$12,497,950,641

$12,420,352,900

1%

$17,371,175,000

-28%

Technology

$104,719,535,141

$122,581,805,148

-15%

$32,862,735,504

219%

Total

$117,217,485,782

$135,002,173,148

-13%

$50,233,910,504

133%

Source: Health Care M&A News, October 2014

Spending on transactions in the Technology sectors reached $104.7 billion, and accounted for 89% of the quarter’s total. While that total is a record for any previous third quarter, it represents a decrease of 13% compared with the high-flying second quarter. The Pharmaceutical sector made up 21% of all Q3:14 deals, but 74% of all spending ($86.7 billion). The majority came from the largest deal of the year announced so far, the $54.7 billion acquisition of Shire plc by AbbVie Inc. Five of the quarter’s 10 largest deals were for pharmaceutical targets.

On the Services side, deal volume increased by 12% compared with the previous quarter, with 173 deals. Dollar volume was stagnant at $12.5 billion, representing a gain of just 1% in the same period. Long-Term Care transactions reached a new record with 80 deals and $9.6 billion in spending. The sector’s deal activity comprised 29% of the total deal volume, and 8% of the total deal value.

“The third quarter was busy, and the fourth quarter could be even busier,” said Lisa E. Phillips, editor of Health Care M&A News. “Even though the federal government clamped down on companies taking advantage of lower corporate tax rates abroad, deal volume hasn’t slackened. 2014 could be one for the record books.”

For more information on The Health Care M&A Information Source or Health Care M&A News, or for a membership to any of our services, please call 800-248-1668. Irving Levin Associates, Inc., established in 1948, has headquarters in Norwalk, Connecticut and is online at www.levinassociates.com. This privately held corporation publishes research reports and newsletters, and maintains merger and acquisition databases on the health care and senior housing markets..